Dharmasena and Others v, Perera, Commissioner & Registrar,
CA Co-operative Development (Western Province) and Others (Senanayake, J.) 225
ROAD CONSTRUCTION & DEVELOPMENT CO. (PVT) LTD.
P.S, DE SILVA. C.J.,
KULATUNGA, J. ANDRAMANATHAN, J.
S C. APPEAL NO. 3/93.
C. COLOMBO NO.
H.C. A.L.T. 2/90.
LT. NO. 2/84/88.
Industrial Dispute – Probationary employment – Unfair Labour Practice – MalaFides – Rights to terminate services during pobationary period.
The appellant accepted a probationary appointment under the respondentthough at the time he was a confirmed employee of Eng-Seng the predecessor ofthe respondent. Although the appellant was an experienced technical officer hisstatus under the contract of employment was that of a probationer who is liable tobe discontinued at the option of the employer.
But the further question arises whether the termination of services was malafide: There was no allegation of unsatisfactory service. An attempt was made toappoint him (despite his being a trained officer) a trainee technical officer, thetermination was oral without a report on his work though it was indicated a report
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 2 Sri L.R.
would be forthcoming and an allegation of irresponsible behaviour during aninquiry into a theft incident at the worksite was made without any evidence ofsuch an inquiry being produced.
On the available evidence the termination of services savours of an arbitrary act.Hence the impunged termination was mala fide.
Cases referred to:
1 Moosajees Ltd. v. Rasaiah  1 Sri LR 365 (CA).
Caltex India Ltd. V. Second Industrial Tribunal High Court Calcutta (1963) LU156.
Ceylon Cement Corporation v. Fernando  1 Sri LR 361.
Utkal Machinery Ltd. v. Santi PatnaikAIR 1968 SC 398, 400.
Appeal from judgment of the High Court.
Faiz Mustapha, P.C. with Amarasiri Panditharatne and M. Welikala for Appellant.
P. A. Ratnayake S.S.C. for Respondent.
Cur. adv. vult.
The appellant complained to the Labour Tribunal against thetermination of his employment by the respondent company on11.10.87. The respondent’s defence was that the impugnedtermination was effected whilst the appellant was under probationaryemployment and that in the absence of evidence that the respondentwas actuated by mala tides, the tribunal was not competent toexamine the ground of the said termination.
The Labour Tribunal held that the appellant was in fact apermanent employee of the respondent company, having beenrecruited into its service on 01.07.87 from service under itspredecessor Eng-Seng Engineering (Pvt) Ltd. (“Eng-Seng”); that theimposition of a period of probation as a condition of the appellant'snew employment was an unfair labour practice; and hence, thetermination of his employment without assigning any reason wasunjustified. In the result, the tribunal directed the reinstatement of theappellant with effect from 01.10.90 and the payment of 23 monthssalary amounting to Rs. 82,250/-.
Uyanagamage v. Road Construction A Development Co. (Pvt) Ltd.
The High Court set aside the order of the Labour Tribunal anddismissed the appellant’s application being of the opinion that theappellant had clearly consented to employment under therespondent subject to probation and was liable to be discontinuedduring the period of probation. The Court relied on the decision inMoosajees Ltd. v. Rasaiah "> which held that the employer is notbound to show good cause where he terminates the services of aprobationer and that the tribunal cannot sit in judgment over thedecision of the employer. It can examine the grounds of terminationonly for the purpose of finding out whether the employer had actedmala fide in doing so. The appellant appeals to this Court.
The appellant served as a Technical Officer under Eng-Seng from01.11.85. Eng-Seng was engaged in a joint venture with the RoadDevelopment Authority (a public corporation under the Ministry ofHighways). The appellant was in charge of work in theTambuttegama area coming under the Anuradhapura Constructionsite. At that stage it was decided to continue the joint venture work bya new company to be incorporated whose employees would consistof all the employees of Eng-Seng and those of the R.D.A. who wereattached to the joint venture, subject to such employees consentingto be employed by the proposed new company.
By a letter dated 23.06.87 (A1), the Chairman R.D.A. offered theappellant employment in the proposed new company on a salary notless than that paid by Eng-Seng. He was requested to signifyacceptance before 30.06.87 and informed that a formal letter ofappointment containing the detailed conditions of employment in theproposed new company would be issued to him upon itsincorporation. Thereafter, the new company (the respondentcompany) had been incorporated and it is common ground that theappellant became an employee thereof with effect from 01.07.87 inthe same capacity and salary as he enjoyed under Eng-Seng. Healso continued with the same work. No formal letter of appointmentwas issued to the petitioner until the lapse of some time.
In the meantime, Director Works R.D.A. by his letter dated
(A4) addressed to the appellant informed him that therespondent company is owned by the R.D.A. and requested theappellant to perfect the annexed application form (A5) foremployment in the respondent company and to return the same
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immediately. A4 states that the emoluments and conditions of servicein such employment will generally be not less than those enjoyed inthe R.p.A.
We next have the perfected application form of the appellant (R2)according to which he had 15 years working experience in civil work,3 years in the U.A.E. as a Pre-cast Foreman, 1 year in Saudi Arabiaas a Road Works Foreman and 1 1/2 years at the Victoria Project as aSection Foreman (executive grade). Thereafter, he served Eng-Sengfrom 1985 as a Technical Officer. In the space reserved for remarks inhis application there is an official endorsement which reads:
“He is an able technical officer for concreting, sand sealing andmetal consolidation".
On these facts it would appear that at the time of his appointmentby the respondent, the appellant was a confirmed employee underEng-Seng. The respondent has not produced any evidence to thecontrary.
Notwithstanding the above facts a letter of appointment dated
(the office copy of which has been produced marked R1)was issued to the appellant, appointing him as a Technical Officerwith effect from 01.07.87 subject to probation for a period of 6months from the date of his appointment. It is not clear as to exactlywhen the appellant received the original of R1 but there is a typedstatement at the foot thereof which has been signed by the appellanton 19.08.87 whereby he accepts the appointment, subject to theterms and conditions set out therein, in his evidence the appellantstates that he signed it when it was brought to his work place by thesite engineer.
The circumstances of the termination of the appellant’semployment are quite interesting. Thus, according to his evidence(which has not been denied) on 11.10.87 the Project Manager toldthe appellant that it was necessary to transfer him to another sectionand directed him to meet the General Manager. Accordingly theappellant met the G.M. who told him that the proposed transfer wouldbe considered on receiving a report from the Project Engineer about
Uyanagamage v. Road Construction £ Development Co. (Pvt) Ltd.
his work pending which he should stay at home. He therefore keptaway from work and met the G.M. again on 16.11.87 when he wasinformed that his services have been terminated and that he willreceive a further communication regarding his earned wages. Hethen received a telegram (A2) directing him to meet the G.M. on
which he did. On the G.M.’s instructions the appellant metthe Personnel Manager who requested him to fill a form forrecruitment as a Trainee Technical Officer; whereupon the appellantreplied that there was no necessity for such training as he hadtraining abroad. Thereafter he went home.
According to his evidence before the Labour tribunal, theappellant's position is that he never became a new employee of therespondent company but that he was absorbed into its service fromEng-Seng with effect from 01.07.87 and continued to work in thesame capacity as he held under the previous employer. He does notaccept the period of probation imposed by R1. On behalf of therespondent, it is contended that in view of his written consent to R1,the appellant is bound by the condition as to probation. Thiscontention is tenable. Hence his status under the contract ofemployment is that of a probationer who is liable to be discontinuedat the option of the employer.
In defence of the termination of the appellant’s services learnedSenior State Counsel cited the following passages from Caltex IndiaLtd. v. Second Industrial Tribunal High Court Calcutta <2) –
'Whether a probationer has put in satisfactory service or notrests with the satisfaction of the petitioner company. Thatsatisfaction cannot be objectively tested and an employer is notbound to give any reason if he does not confirm a probationeron the expiry of the period of probationship”.
Counsel also cited Ceylon Cement Corporation v. Fernando<3) inwhich the employer’s position was that he terminated the employmentof the applicant during the period of probation on the ground that hiswork was found to be unsatisfactory. It was held that in the absenceof mala Tides the employer's decision cannot be impeached beforethe Labour Tribunal.
Sri Lanka Law Reports
[1994) 2 Sri LR.
Learned President's Counsel for the appellant cited UtkalMachinery Ltd v. Santi Patnaik w (Five Judges) where the law hasbeen stated thus:
.. The management has the right to terminate the services of therespondent without assigning any reason. But if the validity of thetermination is challenged in an industrial adjudication, it would becompetent to the industrial tribunal to enquire whether the order oftermination has been effected in the bona fide exercise of itspower conferred by the contract. If the discharge of the employeehas been ordered by the management in the bona fide exercise ofits power, the industrial tribunal will not interfere with it, but it isopen to the industrial tribunal to consider whether the order oftermination is mala fide or whether it amounts to victimization ofthe employee or an unfair labour practice or is so capricious orunreasonable as would lead to the inference that it has beenpassed for ulterior motives and not in bona fide exercise of thepower arising out of the contract. In such a case it is open to theindustrial tribunal to interfere with the order of the managementand to afford proper relief to the employee".
Counsel submits that on the facts of this case, the termination of theappellant’s employment was mala fide and amounted to an unfairlabour practice.
In Moosajee's case (supra) the Court of Appeal found that theworkman was not putting in satisfactory services to the satisfaction ofthe employer and the termination of his services was not mala fide. Inthe Ceylon Petroleum Corporation case (supra) the Court observedthat there was no material placed before the Labour Tribunal touchingon mala fides and hence the Labour Tribunal should not haveinterfered with the impugned termination of services. In the instantcase, the Labour Tribunal decided that the appellant is a permanentemployee and hence his discontinuance without cause wasunjustified. The finding that the appellant is a permanent employee iscontradicted by his letter of appointment. Hence the basis of theTribunal in giving him relief is faulty. But the matter does not end therebecause even accepting that the appellant is a probationer it has tobe considered whether the termination of his services was mala fide.The following facts are relevant in that regard.
Liyanagamage v. Road Construction & Development Co. (Pvt) Ltd.
Mr. K. M. Silva, the Personal Manager of the respondentcompany was the only witness called by the management. Heproduced R1 (the appellant's letter of appointment) and saidthat the appellant’s services were terminated during his periodof probation but did not claim to have done so on the groundthat the appellant’s services were unsatisfactory. The appellanthimself gave evidence and called Mr. Berny Wijesuriya theGeneral Manager of the respondent company. Even during theircross-examination the management did not claim to havediscontinued the appellant on the ground of unsatisfactoryservice.
On the other hand, the evidence clearly shows that theappellant has over fifteen years experience, both here andabroad and was recommended for appointment as being an"able Technical Officer” who had specialised in particular typesof work. Hence, (in the absence of an allegation ofunsatisfactory service) it is difficult to understand why themanagement discontinued him during his probationary periodor attempted to appoint him as a Trainee Technical Officerwhen he met the G.M. on 05.02.88.
The termination of services on 11.10.87 was oral, pending areport on the appellant by the Project Engineer. There is noevidence of any such report but on 16.11.87 the G.M, orallyconfirmed the fact that his services have been terminated. It isalso relevant to note that in the respondent's answer before theLabour Tribunal it is alleged that in the course of an inquiry intoa theft at his site, it was revealed that the appellant had acted inan irresponsible manner; but no evidence whatever of suchinquiry has been produced.
In the light of the available evidence the impugnedtermination of services savours of an arbitrary act.
In the circumstances, I am satisfied that the impugned terminationis mala fide or “so capricious or unreasonable as would lead to theinference that it has been passed for ulterior motives and not in bonafide exercise of the power arising out of the contract”. The learnedHigh Court Judge was in error when he observed that there was noallegation of mala tides on the part of the employer.
Sri Lanka Law Reports
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Learned Senior State Counsel submitted that in any event the reliefof reinstatement granted by the Labour Tribunal is not justified in thatin his letter dated 25.11.87 (R3) addressed to the management theappellant only demanded his earned wages whilst in his applicationmade to the Labour Tribunal he only sought compensation. However,the appellant had at no stage declined reinstatement. Theproceedings before the Labour Tribunal show that the learnedPresident has considered the nature of the relief which wasappropriate in this case. I, therefore, see no reason to interfere withthe order made by the Labour Tribunal.
For the foregoing reasons, I allow the appeal, set aside thejudgment of the High Court and restore the order made by theLabour Tribunal. I also direct the respondent to pay the appellantcosts in a sum of Rs. 2500/-.
Q. P. S. De SILVA, C J. -1 agree.
RAMANATHAN, J. -1 agree.